Tobacco Tax Will Not Generate As Much Money As Expected, Expert Says

Wednesday, March 1st 2017, 5:40 pm

A national expert on tobacco tax says Oklahoma stands to bring in millions of dollars with a tax, but not as much as lawmakers hope. 

With the state facing a nearly $900-million budget shortfall, one expert says a cigarette tax won't be the solution to our financial problems, but it will help.

Dr. Frank Chaloupka is an economics professor at the University of Illinois and also works with the World Health Organization (WHO) on the economics of Tobacco control. He says the tobacco tax Oklahoma lawmakers are considering would fall short of raising the $200-million they hope it would, but just barely.

"In Oklahoma we're estimating $1.50 would generate about $183.9 million, so a little bit lower because I think we see bigger reductions in smoking built into our model," said Chaloupka.

Chaloupka estimates, with that $1.50 per pack tax increase, over 30,000 Oklahomans will quit smoking and 28,000 fewer kids will take it up, leading to 16,000 fewer deaths tied to tobacco. 

He says the greatest impact would be felt among lower-income Oklahomans.  And Chaloupka doubts many people will be crossing state lines to buy smokes, he says they didn't in 2004, the last time the tobacco tax went up.

"What we saw is revenue went up like we would expect in Oklahoma. We saw virtually no change in other states. So, it's not like a lot of Oklahomans are buying cigarettes in Missouri or Texas or somewhere else and driving revenues up there."

Last year, House Democrats held up a bill to increase the tax on tobacco. This year they say they're willing to cooperate, only if Republicans work with them on other cost-cutting and revenue-generating measures.